Domestic revenue is at a record level, so why aren't studios smiling? Between the dramatic slide in 3D attendance and a string of jaw-dropping disappointments, there's little reason to celebrate.

When Avatar opened in December 2009, the promise of 3D seemed boundless. A staggering 83 percent of its domestic gross came from 3D. Six months later, more than 56 percent of Toy Story 3's North American earnings came from 3D as families lined up in force to pay an extra $3 to $4 a ticket.

Fast-forward to summer 2012, and the slide in 3D attendance that began last year has gotten much worse. On Brave's opening weekend, 32 percent of the booty came from 3D, a record low. It wasn't much better for June's other animated tentpole, Madagascar 3: Europe's Most Wanted (38 percent). Across Hollywood, studio executives say the dips point to a sea change in habits that have left the first half of the year littered with heartbreak: Cash-conscious consumers are becoming more discerning about what movies they see, 3D or otherwise. "Prices are too high," says a studio distributor. "We've turned our business into appointment moviegoing, at least domestically. There's no more generic moviegoing."

So why, with all the gloom, is 2012 domestic revenue through July 8 at an all-time high of $5.86 billion? The Avengers and The Hunger Games are a big reason, collectively taking in $1.02 billion in the U.S. and Canada. Dr. Seuss' The Lorax, Madagascar 3 and Brave are next on the chart -- even if more kids and parents are seeing them in 2D. Comedy also is breaking out, between 21 Jump Street and Ted.

But that can't make up for the out-and-out box-office carnage (John Carter, Battleship) and string of disappointments (Tim Burton and Johnny Depp's Dark Shadows, Rock of Ages, Abraham Lincoln: Vampire Slayer, Adam Sandler's That's My Boy, Sacha Baron Cohen's The Dictator). "There is no safety net left; the middle ground is gone. If you make a movie people don't want to see, there's no historical precedent that can save you from a terrible fate. You wake up one day and even Burton, Depp and Sandler aren't invincible. If people reject a movie now, it can be astronomically more severe," concedes one studio head.

Theater owners don't buy the argument that ticket prices are to blame for the box-office blues, invoking the common refrain, "It's the movies, stupid." While exhibitors aren't all wrong, there's no denying the cost of going to the multiplex has increased. In Los Angeles, an adult 3D ticket at AMC Century City is $17.75, while a children's ticket is $14.75 (both $4 more than the regular prices). Translation: A family of four will pay as much as $65 to see a film in 3D, and that's before concessions. The regular admission price is $49, still not cheap.

It can cost substantially less to see a movie in smaller markets; in Kansas City, Mo., AMC charges $11 for a 3D title and $7.50 for 2D.

According to the National Association of Theatre Owners, the average ticket price is now $7.92, just off the all-time high of $7.93 set in 2011 and above the $7.89 posted in 2010. Fanboys appear more willing than families to fork over the extra dough to see a film in 3D or Imax (the large-format exhibitor is thriving), with The Avengers and Prometheus drawing a larger percentage of their domestic grosses from 3D than animated titles, even if at lower levels than before. And the continued appetite for 3D internationally -- and specifically in boom markets Brazil, Russia and China -- is making up for the damage stateside. In China, Avengers grossed $84 million, much of it from the more expensive format. Says the studio head: "3D doesn't have to justify its existence domestically to remain valid. The primary benefits lie across the oceans."

Sony vice chairman Jeff Blake agrees the middle ground is getting squeezed out at the domestic box office but takes a holistic view. "A lot of event pictures, including Amazing Spider-Man, are delivering around the world, as are comedies and adult dramas like The Best Exotic Marigold Hotel. I think you have a pretty healthy market."

Come on Rufus..
the only reason 3D is pushed by the studios is because it makes them more money. If people don't see enough value in 3D to pay extra for it, it has failed. Next thing is you start paying customer to watch movies in 3D ...

Mike's purpose is to justify not spending a small amount of money in the whole scheme of things to bring in 3d.

Slap's purpose is to justify his claim from a couple of years ago that 3d is dead.

So if you want to say that 3d is dead because customers are reluctant to spend $3 to upgrade from a 2d to 3d ticket. I will give you that. Problem with me is that is a flawed business model. Many small theaters that are making the digital conversion are spending $5-$10,000 or more to upgrade their sound systems (about the same price as a Dolby 3d system). Are those theaters charging more for better sound quality? Come on we are talking about a 25-40% increase in cost of a ticket.

Leeler did not answer my question. He is showing 3 movies out of 6 screens in 3d and not offering a 2d option and he is not charging a 3d upgrade free. If 3d is dead, he would be scrambling to dump 3d would he not? Or at least running 2d shows? How dare you show 3d Leeler when it is dead and nobody wants to see 3d!!

Theaters that show both 2d and 3d and charge no upgrade fee, see more ticket sales going toward 3d.

It is simple to me. People like both 2d & 3d but just do not want to pay for it. Golly gee, people do not want to pay for things? The cost to run a 3d money is so small in the whole scheme of things that it is ridiculous to even charge an upcharge.

Don't forget that people are still struggling in this economy because of George Bush and the racist-obstructionist tea party.

Rufusjack is mostly correct. We have seen over and over a split of 2d vs 3d preference. For us we want to offer both formats to remain current with industry trends. We like the idea of being in a small town but offering amenities that cities have. We are closed market yet have always had digital sound, converted traditional slope to stadium, and added kinotone projectors for a superior picture. All of these we did without raising our prices.
The difference I see with 3d is the added labor costs of collecting and cleaning. We charge one dollar extra which helps the ongoing labor costs of 3d. The other added cost for us has been glasses theft and destruction which unfortunately is approaching 5000 dollars since avatar. While I agree that the initial outlay for 3d is not particularly large the ongoing expenses are not to be ignored. Regardless I am glad I put 3d in and will continue to offer it at the one dollar upcharge while giving our customers a choice of both formats.

This is the third incarnation of 3D since the 1950s. The first two didn't last very long. I personally suspect it was because the story's were weak and after you see so many spears thrown at you you kinda lose interest. I honestly haven't seen any of the current 3D films (saw Avatar in 2D) so I wonder if the problem is not the same as it was the first two times. I also suspect that the up-charge is hurting 3D. While I don't think any of my friends here are filthy rich I think some have failed to see the fact that much of the population is hurting financially and really are counting pennys. When faced with the choice of paying an extra buck or two to see a movie or buying a loaf of bread they are going to choose the bread. I believe a theatre can survive very well and even prosper without spending the extra money for 3D equipment. Frankly I agree with slap. It isn't going to be around much longer. The industry needs to concentrate on giving the movie going public good films with NEW story lines.

The difference I see with 3d is the added labor costs of collecting and cleaning.

We have plenty of idle staff hands through out the day and week to do the cleaning. I see no additional labor for us to collect and clean. Now that I am taking a weekday off, my staff has a ton of extra time for extra duties.

sorry, just saw this post now. Now I know why my ears were burning! Running two theaters takes a lot of time!

Anyway, yes we have 3D in all six auditoriums and no, we do not have an upcharge. We took over operations of this theater a year ago and it was simply the wrong time to be raising prices, both because we just took over and especially because of the economy. We have talked of implementing one but so far have resisted.

At one point a couple of weeks ago we had 3D running in four auditoriums, so no 3D is not dead by any means. I can't tell you how many people have asked me if Dark Knight would be in 3D and were disappointed it wasn't. We have talked about how to run movies in both formats but wanted to avoid customer confusion. 2D on even dates and 3D on odd? 2D matinees and 3D evenings? 3D first week and 2D second week?

We have no added labor costs with regards to 3D. It is super easy, just hand out the glasses and then put out the blue bins for customers to deposit them into at the end of the show. No cleaning, no added equipment, no eyeing customers as they leave to make sure they're not swiping them, nothing extra at all. Yes, it is another thing to inventory, but that is no big deal.

Our main reason for not installing 3D when we went digital is our demographics. We are a small town with a large retirement population, and a lot of low-income families. The 18-25 demographic is quite small here. Despite this, our community is very supportive and we do pretty well. But after polling our regular and even not-so-regular customers, I got the impression that old folks didn't want to wear (essentially) sunglasses over their regular glasses in the theater and young folks didn't want to pay the surcharge. Of course, there are some people who really wanted 3D but even those people said they only want 3D for big, event-type films, which they usually watch more than once and would only want to pay to see it once in 3D. I'm comfortable with them going out of town once per year.

Our other reasons for not installing digital:

1.) I didn't want to install silver screens or a dish washer, depending on which 3D we chose. The dishwasher mostly a space issue, I wasn't sure where we'd put it.

2.) I felt like 3D would be like opening a Pandora's box of confusion amongst customers (people wanting to watch 2D at a 3D showtime or vice versa, people upset about the surcharge, etc..)

3.) Scheduling. 7PM is our most popular showtime. Should I show 2D or 3D for that show time? Will we lose "butts in seats" because they wanted to watch the 7PM show but did or didn't want 3D.

All in all, I know this was the best decision for our theater. I don't regret it, and I haven't for one second wished we had 3D. I've had a lot of customers thank me for not installing it, and quite a few 3D fans express that they know this was the best decision for our theater.

If we were a slightly bigger, more affluent town with a college-age/young adult population to speak of, I would definitely have installed 3D without question.

Our main reason for not installing 3D when we went digital is our demographics. We are a small town with a large retirement population, and a lot of low-income families. The 18-25 demographic is quite small here. Despite this, our community is very supportive and we do pretty well. But after polling our regular and even not-so-regular customers, I got the impression that old folks didn't want to wear (essentially) sunglasses over their regular glasses in the theater and young folks didn't want to pay the surcharge. Of course, there are some people who really wanted 3D but even those people said they only want 3D for big, event-type films, which they usually watch more than once and would only want to pay to see it once in 3D. I'm comfortable with them going out of town once per year.

Our other reasons for not installing digital:

1.) I didn't want to install silver screens or a dish washer, depending on which 3D we chose. The dishwasher mostly a space issue, I wasn't sure where we'd put it.

2.) I felt like 3D would be like opening a Pandora's box of confusion amongst customers (people wanting to watch 2D at a 3D showtime or vice versa, people upset about the surcharge, etc..)

3.) Scheduling. 7PM is our most popular showtime. Should I show 2D or 3D for that show time? Will we lose "butts in seats" because they wanted to watch the 7PM show but did or didn't want 3D.

All in all, I know this was the best decision for our theater. I don't regret it, and I haven't for one second wished we had 3D. I've had a lot of customers thank me for not installing it, and quite a few 3D fans express that they know this was the best decision for our theater.

If we were a slightly bigger, more affluent town with a college-age/young adult population to speak of, I would definitely have installed 3D without question.

You have a lot of old folks and 7pm is your busiest show time? When we run movies appealling to the retired crowd, 4pm is our busiest time.

I would guess that there are 2800+ movie theaters running both 2d & 3d without many problems. It might need a bit of getting used to.

I agree with the silver screen. I hate running 2d movies on my silver screen. I have been told by those who hand wash their dolby 3d glasses that it only takes about an hour a day to keep them caught up if you have a relatively small theater. This is easily accomplished in between shows when very few people come to the concession stand. Staff will just have to get used to texting less.

Yes, we have a lot of seniors and 7PM is, by far, our most attended show of the day. We have a lot more families for the 1PM and 4PM shows, seniors and adults (less kids) at 7. On Sundays, the 4PM matinee is usually the most attended. We have a lot of senior groups that prefer to come in for weekday shows at 7PM. It's part of their social routine.

When we run a movie that is particularly appealing to the retired crowd (anything with Meryl Streep or Clint Eastwood, haha) we are slammed for basically all show times except the 10 PM show.

...I would hope I could tell you what I am doing without it being attacked like I was showing kiddie porn. It's a pretty simple biz decision for us and I am not judging anyone when I make mine: it is working well for us. What's clear in the bigger debate on 3-D is that the brave new world overall has not been proven true. Demand is declining and that is a fact not an opinion. We may even add it if things change. Who knows. Meanwhile: we do not have a handicapped rest room and people who need to use our next door neighbor restaurant.